New York City launches litigation against Big Oil & Gas for cost of climate change – will Australia follow suit?

I was intrigued to read a report in the New York Times yesterday, that New York City has sued 5 oil companies seeking compensatory damages for the city’s costs of dealing with climate change. The oil companies that have been named as defendants include BP, Chevron, Conoco Phillips, Exxon Mobil and Royal Dutch Shell.

NYC Mayor Bill de Blasio gave a press conference announcing (and tweeting) that he intends to divest the city’s public servant pension funds (with a current value of over $5billion) from fossil fuel investments. The two pronged attack on oil & gas companies has been labelled as a ‘stunt’ and ‘meritless’ by several gas and manufacturing industry representatives.

I have tracked down a copy of the complaint (or statement of claim in Australia), which you can view here. The lawsuit includes a comprehensive explanation of the science of climate change and the scientific knowledge and industry groups surrounding the impact of fossil fuels from the middle of the 20th century.

The New York Times suggests that the lawsuit is similar to those launched against cigarette manufacturers during the 1990s. That is, that the oil and gas companies knew for decades that the impact of burning fossil fuels was climate change, but that conclusion was hidden from scientists and the public.

After perusing the lawsuit, I think the case hinges on the following key points:

  1. It alleges that these corporations made, produced, marketed, sold and promoted a product that caused severe harm, when it was used exactly as it was intended.  It alleges the companies should ‘shoulder the costs of that harm‘. This is described as a public and private nuisance claim. In Australia, such a claim would be novel but potentially actionable as a tortious claim for negligence, nuisance and/or an action under the Australian Consumer Law for manufacturer and product liability.
  2. It alleges that the sale of the harmful product has caused an invasion of property owned by the City of New York, increased heat, sea level rises and this causes a continuing intrusion and a trespass to the city’s property. This is described as a claim in trespass. Again, no analagous claim has ever been made in Australia – but if attempted would likely be described as a tortious civil claim for trespass and/or negligence.
  3. It alleges that the companies had full knowledge (from as early as 1968) of the harm they were selling. It states they ‘knew decades ago that fossil fuel products … would cause a dire global warning problem … they told the public a very different story’. This is described as an ‘orchestrated campaign of deception and denial regarding climatechange. In Australia, such a claim may amount to fraud, misleading or deceptive conduct, misrepresentation or even breach of a company’s obligation to make continuous disclosure under the Corporations Act 2001 (Cth).
  4. NYC is suffering from climate change through increased temperatures, sea levels rising, flooding, shoreline erosion, and extreme storms such as Hurricane Sandy. The City must build sea walls, levees, dunes, and other structures to elevate and harden the city from these risks and respond to climate change events.

NYC flood

The lawsuit includes various diagrams, including this image which indicates the past and future flood levels for NYC (at p.25). By 2020 substantial sections of Queens and Brooklyn are predicted to be underwater. For anyone interested in what the future flood modelling shows for their home in Australia, this Australian government website purports to know.

Finally, NYC requests that the proceeding be conducted as a jury trial. In Australia, (or at least in the state of Victoria), a plaintiff would not be able to request a jury trial for such a case, as juries are only available for personal injuries, defamation and criminal matters.

Between 2011 to 2017 there have been other lawsuits brought by cities, counties and residents in the US and Europe, alleging similar grievances against fossil fuel producers.

Unsurprisingly, each of the named defendants has oil and gas interests in Australia. BP and Exxon Mobil and Royal Dutch Shell (simply known as ‘Shell Australia’ in the Pacific) have numerous gas exploration and production sites throughout Australia and PNG.  Locally, Chevron operates through its wholly owned subsidiary  ‘Chevron Australia Pty Ltd’ – which claims to be the largest holder of LNG in the country. It has also operated the Barrow Island Oil fields (off the coast of Western Australia) for over 50 years. Conoco Phillips has LNG and hydrocarbon exploration and production sites and joint ventures in the Northern Territory, Western Australia and Queensland.

After hunting through Australian legal news, I have not found any inidcation that any of these big five are currently facing any similar climate change litigation in Australia. Interestingly, the local climate change legal approach has targeted other corporates from a different angle.

In August 2017 a lawsuit was launched by two shareholders in the Commonwealth Bank, alleging that the CBA’s 2016 Annual Financial and Directors Reports failed to disclose the true risks of climate change to the CBA’s business and assets. This was alleged to amount to a contravention of ss.292, 295, 297, 298 and 299A of the Corporations Act 2001. By September 2017, the lawsuit was abandoned after the CBA included climate change risk disclosures in its 2017 Annual Reports.

In Australia, climate change litigation is in its infancy. Judging by the recent trend in the US and Europe,  I consider that 2018 will be the year that we see Australian climate change litigation take off.

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